Outlook 2019: RINs Market Looks toward Washington in 2019

by Wesley Swift (S&P Global Platts) The market for Renewable Identification Numbers looked for relief in 2019 after a tumultuous 2018. Uncertainty over the nation’s renewable fuel policy created a volatile market for RINs, the credits used by refiners and fossil fuel importers to prove compliance with federal renewable fuel blending mandates. Whether that happens will depend on the decisions and actions of the US Environmental Protection Agency.

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After D6 ethanol RINs for 2017 reached the highest level of 2017 on October 31, 2017, at 98.50 cents/RIN, prices began tumbling down. The new year brought little relief, as 2018 D6 RINs continued to fall into January.

The market hit bottom on November 13, when D6 RINs for 2018 compliance were assessed at 7 cents/RIN. Three weeks earlier, on October 24, D4 biodiesel RINs reached their lowest level for 2018 at 30 cents/RIN.

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Under the Renewable Fuel Standard, a refinery with a capacity with 75,000 b/d or less can petition the EPA for a waiver from meeting federal blending mandates, which is dependent on the refinery demonstrating an economic hardship. The EPA has not reallocated those waived volumes into future blending mandates.

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The program came under more scrutiny late in 2018, when published reports showed that large oil companies were granted waivers for their smaller refineries.

The EPA has announced that it will suspend the program pending a review in 2019.

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In October, the White House announced it would consider possible changes to the RIN market. Possible changes include eliminating third-party buyers and sellers and time limits on holding RINs. The announcement drove prices further down.

And while any possible change in federal rulemaking likely is months away – and would likely be litigated thoroughly — any move to constrict the number of buyers in a marketplace would be likely impact prices. READ MORE